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What the Government's no deal tariff regime means for the pig sector

15th Mar 2019 / By Alistair Driver

Import tariffs would remain on most pork products in the event of a Brexit no deal. But they would be set at significantly lower levels than the rates currently in place at EU level.

The Government finally published its schedule of no deal import tariff rates on Wednesday, just over two weeks before they could, in theory at least, come into effect.

Analysis by AHDB shows that while tariffs on most pig meat products would remain in place, they would be reduced to around 13% of the current rate the EU applies to non-EU countries. Rates vary depending on cuts. The tariffs are applied on a per kg basis, but are higher for more valuable goods.

Based on the breakdown of products the UK imported last year, and their average, the tariffs equate to around 4-5% of the price of pork, bacon and ham imports, AHDB has estimated. However, sausages have not been included in the tariff schedule, suggesting they will be zero-rated. Sausages account for up to 15% of UK pig meat imports annually.

The tariffs would apply for up to 1 year, at the end of which the Government would look towards a more long term solution based upon consultation with stakeholders.

Product

Weighted average tariff rate (€/100kg)

Effective ad valorem rate (2018 prices)

Fresh/frozen pork

9.4

+5%

Bacon

12.0

+4%

Sausages

0.0

+0%

Ham

20.6

+4%

Overall

8.7

+3%

Source: AHDB

The total list of UK pork tariffs can be found here. It is extensive and some would not be relevant in the event of a no deal, such as imports of offal or belly. Imports would not be managed through the use of any Tariff Rate Quotas (TRQs), unlike some other sectors, NPA senior policy advisor Ed Barker explained.

Why are the rates so low?

At first glance this might appear to be an imbalanced policy. After all, in the event of a no deal, UK pork exporters would be paying full EU tariffs on pork exports.

For pork, this would have a significant impact, particularly, as has been well-documented, for cull sow exports to Germany and Belgium. It is important to point out that these tariffs would not all kick in from day one – UK exporters would be able to take advantage of some tariff-free quotas for a limited time, but would still have other non-tariff barriers to deal with.

But Ed explained that in setting its import tariff rates the Government sought to find the balance between preventing volatile price increases for UK consumers while also protecting domestic sectors most exposed to a no deal Brexit. The aim has also been to minimise disruption to supply levels.

So while the tariffs are low, crucially they will be applied across the board, including imports from the EU (with the important exception of trade direct from the Republic of Ireland to Northern Ireland). Currently, tariff-free imports of EU pigmeat products account for around 60% of UK domestic consumption. Under the no deal tariff regime these would typically be around 4-5% more expensive.

But it would also mean non-EU imports, currently priced out of the UK market by EU tariffs, would be more affordable. There would, therefore, likely to be some sort of shift from EU to non-EU imports, dependent partly also on what sort of policy is put in place around import standards and whether retailers would be happy to accept imports of a much lower standard considering their supply chain commitments around antibiotic use, for example.

Ed said: “While far from perfect, the outcome is much more favourable than appeared likely at one stage, when we seemed to be heading for low or zero tariffs across the board. The NPA made a strong case for some form of tariff protection to prevent the market being flooded by cheap imports from the EU and beyond, in some cases produced to lower standards than permitted in the UK. The Government, thankfully, listened.

“It is worth stating that only a small number of products received any protection so the fact that pork has been included is a success for the NPA. Products such as eggs, cereals and some dairy products have not been given any protection. By contrast, sectors such has sheep, beef and poultry have been given higher protection rates because of their sensitivity to competition from the rest of the world, and reliance on EU export market.”

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The National Pig Association is the representative trade association for British commercial pig producers and is allied to the NFU and represents the pig interests of NFU members. National Pig Association, Agriculture House, Stoneleigh Park, Warwickshire CV8 2TZ. Registered in England No. 3859242.